New Multicity Estimates of the Changes in Home Values, 1920-1940

Robert Shiller created the most commonly cited time series for nonfarm home values and prices between 1920 and 1940 by splicing a series developed by Grebler, Blank, and Winnick (1956) for 1890 to 1934 with a new series based on 30 asking prices per year in five major cities to extend the series from 1934 to 1953. We develop and examine several alternative measures of housing prices over the period 1920 to 1940. All series show that nominal housing prices fell by 20-30 percent from a peak in the late 1920s to a trough around 1933 and 1934. However, there is substantial disagreement about the values circa 1920 and 1940. For 1920 the Shiller Hybrid suggests that housing values were 5-7 percent higher than in 1930. In contrast, all alternative series show that housing values in 1920 were 6-20 percent lower than in 1930. For 1940 the Shiller Hybrid index rises within 5 percent of the 1930 value. In contrast, all of the other series have 1940 values that are 18.7 to 35.6 percent lower than in 1930. In summary, the alternative measures suggest much stronger growth in nonfarm house prices between 1920 and 1930 and much less recovery by 1940 than the Shiller Hybrid series.